Quilter and Cheviot Asset Management, two UK-based firms that have been in talks about a possible merger, announced they are combining their businesses today, creating a joint firm with a total of more than £12 billion of client money.

Quilter and Cheviot Asset Management, two UK-based firms that have been in talks about a possible merger, announced they are combining their businesses today, creating a joint firm with a total of more than £12 billion ($19.4 billion) of client money.

The merger is subject to regulatory approval and, if clearance is given, the deal will be complete at the end of 2012, the firms said in a statement.

The deal is being financed by Quilter’s European private equity firm owner, Bridgepoint. The cost of the transaction was not disclosed.

The move represents the end of Cheviot Asset Management as a stand-alone business, which it has been since it was founded in 2006 by Michael Kerr-Dineen, the former chief executive of Laing & Cruikshank, the business bought by UBS in 2004.

Earlier this year, Morgan Stanley Smith Barney – as it was then called – sold Quilter to Bridgepoint for an undisclosed sum. This was the second time that Morgan Stanley had disposed of Quilter in the past decade; Morgan Stanley initially sold the wealth management unit to Citigroup in 2006. It is understood that Morgan Stanley, which then reacquired Quilter in 2009 as a result of its joint venture wealth management deal with Citigroup – the previous owner of Quilter – wanted to dispose of Quilter in order to focus on ultra high net worth clients.

The deal represents another sign of a quickening pace of wealth management industry merger and acquisition activity in recent months. For example, a few weeks ago, Falcon Private Bank absorbed the London-based Clariden Leu (Europe) business that it bought from Credit Suisse. Julius Baer bought the non-US wealth management arm of Bank of America Merrill Lynch earlier this year, while Safra, the Brazilian firm, bought the majority stake in Switzerland’s Sarasin from Rabobank, the Netherlands-based group.

Sizes

Quilter had £8.2 billion of assets, and Cheviot Asset Management had £4.1 billion, at the time today’s deal was announced. The combined firm will be called Quilter Cheviot. Most of the money is in the form of discretionary portfolios run for private clients, charities and trusts, pension funds, corporate bodies and life companies.

Quilter has 385 staff based in thirteen locations in the UK, Jersey and Ireland. Cheviot has 139 partners and other staff in offices in London and Liverpool.

The combined group will be run by chief executive Martin Baines, Quilter’s current CEO. Cheviot CEO Kerr-Dineen will join the holdings board of Quilter Cheviot and act as a senior advisor to the firm, the statement said.

“We have made no secret of our intention to join forces with complementary businesses to accelerate our growth and there is a really strong fit between the two firms,” Baines said in a statement.

Michael Kerr-Dineen said: “The transaction is recognition of all we have achieved and provides us with far greater scale and geographic reach, and will enable us to enhance our client services and capabilities still further.”

Advisors involved in this transaction included:  for Quilter/Bridgepoint - Linklaters (legal) and PwC (financial, tax & regulatory); for Cheviot - Addleshaws (legal) and Deloitte (tax); for management - Weil, Gotshal & Manges (legal).